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Goa power producers free to generate, distribute

Sandesh Prabhudesai in Panaji

Goa producers have received a bonanza. Now they can generate and distribute power on their own to specific customers without signing any power purchase agreement.

This open power policy for generation and distribution is a fallout of the state's desperate hunger for electricity, with many new industries being set up. It is also in tune with the Goan government's aim to hand over major components of infrastructure development to the private sector.

The state government will continue to exercise control over the common tariff rates and implement existing environmental norms. The latter is important as tourism remains the state's primary source of revenue. The government intends to set up a power regulatory authority to monitor the private producers.

The power producers also have the option to utilise the state-owned transmission and distribution network, which is in a poor state. However, they can sell power only to exclusive units, mainly the industries.

"The state government's power will also be available, with its fluctuations and blackouts," said Chief Minister Pratapsinh Rane, who is seeking the cabinet's approval for his new plan.

Restrictions on the capacities of existing power plants, or those under construction, are also being waived. One beneficiary is the Salgaoncar Reliance Private Ltd power project, which is nearing completion.

The power purchase agreement between the government and Reliance Salgaoncar has been amended to allow the latter to sell all its 50 mw of power privately. As per the earlier deal, 38 mw of power had to be sold to the government.

Justifying the new government's new plans, state Power Minister Mauvin Godinho said, "We had no other option but to open up the power sector to private producers since we are unable to meet the committed load of 125 mw for the new industrial units sanctioned by the government."

The state at present draws only 180 mw of power from the national grid, while power consumption crossed that mark long ago. This has resulted in regular power shedding and voltage fluctuations, affecting the industrial scenario.

In addition, the state totally sanctions 445 MVA against its capacity to provide only 190 MVA of power.

With Goa offering a five-year tax holiday, the state has seen a rush of new industries during the past few days. The ruling Congress party is currently negotiating with the Centre for an extension of the tax holiday by another five years.

Not all are happy at the state government's latest moves. "They invited this chaos with their own deeds," alleged Goa Small Industries Association president Parag Joshi. He cited an example, "Despite knowing the power crisis, they have permitted 16 power guzzling ferro alloy units."

Small scale industrialists, who run 5000 units by using only 25 mw of power, are now strongly demanding the withholding of all sanctions till the situation improves.

They also remain sceptical of the latest proposal as the government has refused to provide bank guarantees to the power producers to set up these plants.

Meanwhile, the Goan government has decided to present an interim budget which will propose new taxes, without waiting for the Centre's sanction.

The state's budget has gone haywire with the central government still to take its vote of confidence and the new Planning Commission deputy chairman still unknown. Normally, state governments present interim budgets without any tax proposals in such a situation.

But the Congress government in Goa is running out of patience. Its coffers are practically empty and it has little choice but to announce fresh measures for additional resource mobilisation rather than seek the Centre's assistance.

There are two reasons for the state government's dismal fiscal situation: first, implementation of the Fifth Pay Commission's recommendations; and second, the unrestricted expenditure of the 14-member jumbo cabinet in a house of 40.

While the new budget will be presented next week, the ongoing assembly session has seen on its tables yet another statement for supplementary grants, this time to the tune of Rs 2.42 billion, amounting to a fifth of its annual expenditure.

While preparing its budget, without consulting the Planning Commission, the state has prepared an annual plan outlay at Rs 1.71 billion, around Rs 590 million less than last year. Central assistance has been pegged at last year's level of Rs 593.4 million.

Though central assistance is bound to increase, Chief Minister Pratapsinh Rane has decided to mobilise additional resources via new taxes. He had announced some time ago that his government would totally revamp the sales tax and excise duty structure.

How this will benefit the state is still a mystery? So far, the low sales tax and excise duties on vehicles and liquor in Goa has seen high sales volumes, and been been a major source of revenue for the tourist state. Half the customers hail from outside the state.

Goa is also waiting for the BJP-led government to keep its promise of handing 29 per cent share from the central taxes, including customs and corporation taxes, to the states. This would help Goa's treasury by an additional Rs 30 million.